01 February Bitfinex Alpha | Bitcoin ETF inflows continue to lead the market
In Bitfinex Alpha
This week, cross-chain analysis delves into the complex volatility of the cryptocurrency market, especially dramatic shifts in ETF flows and short-term behavior of cryptocurrency holders. What stands out are the significant withdrawals from the Grayscale Bitcoin Trust ETF since it was converted into a spot Bitcoin fund, resulting in a significant $4.3 billion asset decline. This event played a pivotal role in the recent market correction, which saw Bitcoin fall 20% from a high of $48,700 to a low of $38,600.
ETF inflows, especially from GBTC, have contributed to increased volatility and the current market downturn. This was exacerbated by FTX liquidating its GBTC holdings and exacerbated by selling pressure.
We also focus on short-term Bitcoin holders who have recently made significant profits. The short-term price stability and future direction of BTC are closely related to the strike price of these short-term holders, which has been a key support level during similar market corrections.
The US economy entered 2024 with a significant increase in business activity in January, marking a strong start to the new year. This recovery in economic activity has also coincided with a decline in inflationary pressures, as evidenced by the company's lowest product price increase in more than three years.
Following this positive start, the housing market also showed vitality, with a significant increase in new single-family home sales in December, thanks in part to lower lending rates. This confirms the housing industry's contribution to economic growth.
Despite a 21-month decline in key economic indicators such as the Leading Economic Index (LEI), the lowest level since March 2022 in December, the economy showed strength by expanding at an annual rate of 3.3 percent in the last quarter of the year. . Consumer spending remains a strong support for the economy during this period.
The Personal Expenditures (PCE) Index rose 0.2% in the month before January 26, after a slight decline in November, the Bureau of Economic Analysis said. It is the smallest increase since March 2021, and is close to the Federal Reserve's inflation target of 2%.
This raises questions about the sustainability of this downward trend in inflation.
In the latest news from the world of cryptocurrencies, the cryptocurrency landscape continues to evolve with important developments affecting both the technical and legal aspects of the sector.
The International Banking Institute for Innovation (BIS) has taken a strategic step by introducing Project PROMESA, a blockchain initiative that aims to digitize promissory notes through the use of decentralized ledger technology, with the aim of improving the management and transparency of these financial instruments.
On the user side, Polygon has shown significant growth, almost matching Ethereum by attracting 15.24 million users in 2023, just 15.4 million users behind Ethereum. This growth shows strong competition and diversity in the cryptocurrency ecosystem.
While last year's trend was the emergence of non-fungible tokens (NFTs) dominating the headlines, there has been a significant shift towards decentralized finance (DeFi).
In legal news, the US government is preparing to auction off approximately 2,934 bitcoins, with a current value of approximately $133 million. These assets were seized in connection with the sale of illegal drugs on the dark web, with individuals such as Ryan Farris and Sean Bridges being implicated in the activity.
The Securities and Exchange Commission (SEC) has postponed important decisions affecting the cryptocurrency market. Specifically, the decision to convert Grayscale's Ethereum Trust and BlackRock App into a cryptocurrency spot trading fund (ETF) has been postponed.
Furthermore, a legal battle took place between Binance and the Securities and Exchange Commission. The dispute centers on the presentation of evidence and witness testimony, with disagreements over the scope and necessity of the SEC's investigation into BAM Trading Services, the parent company of Binance.US.
These developments reflect a dynamic and rapidly changing sector where technology, market dynamics and regulatory frameworks are constantly interacting, shaping the future of cryptocurrencies and their integration into the overall financial landscape.
Have a productive trading week!
